What is Cardano?

Cardano is a general purpose Blockchain, much like Ethereum, where you can run nodes, develop Smart Contracts and DApps, and it’s powered by a consensus algorithm. It has its own crypto native currency called ADA, which can be used to validate transactions as we will see later on.

Cardano was founded by Charles Hoskinson, the co-founder of Ethereum, and it is said to be a “third generation” blockchain that is designed from the ground up to solve all the problems previous generations had. It has a scientific approach to problem solving with academic peer-reviews of everything they do.

Blockchain generations

Generation I

It is said that Bitcoin is first generation Blockchain, as it is the first one to appear, and it has one “layer” where all the transactions are settled and the consensus algorithm Proof Of Work (PoW) runs. The only thing that we can do with Bitcoin is to transfer money from one account to another. While it’s true that Bitcoin can support some logic around how to spend the money (timelocks, multi-signature transactions, etc.) it’s still very primitive. Also, the PoW consensus algorithm has been criticised a lot due to the power consumption. Another common pointed issue with Bitcoin is the time it takes to validate transactions, with a 10 min block time, it’s becoming a sort of “legacy” blockchain for some people.

Generation II

The most prominent blockchain nowadays is Ethereum, and it’s considered a second generation Blockchain. This blockchain has a settlement layer of transactions and consensus algorithms, but also adds a new dimension by including a turing-complete programming language. This means the possibilities for programming money are endless. With second generation blockchains like Ethereum, we can program complex Smart Contracts that can re-create the logic of common financial instruments in a decentralised way, for example with DeFi. One of the biggest problems that this generation has is its scalability. Ethereum still has around 17 transactions per second, and if you think about the amount of projects that are building on top of it, it is becoming more and more complex to scale. Other problems are around security (DAO and DeFi hacks) and flexibility (currently, most changes in the core protocol might need a hard fork to implement them).

Generation III

Third generation Blockchain, aims to solve all of the above problems from the start. We will go deep into how Cardano is going to fix these issues later on, but first let’s have a look at Cardano’s organisational structure, to geta grasp on how immense this project is.

Organisation

Cardano’s organisation is constituted of three major players:

Input Output Hong Kong

Founded in 2015 by Charles Hoskinson and Jermy Wood, this company is focused on the research and development of different Blockchain and decentralisation solutions. It is the scientific branch of Cardano organisation, and is in charge of the main development. Input Output also supports other projects such as Ethereum Classic, Symphony, Scorex and others.

Emurgo

Emurgo is a multinational company founded in 2017 based in Japan. It develops, funds and supports different commercial projects helping them to integrate Cardano’s Blockchain technology. It is the commercial branch of Cardano’s organisation. It works with all sorts of enterprises, from startups to big governmental agencies. Emurgo also develops the Yoroi wallet which can be used to hold ADA.

Cardano Foundation

The Cardano Foundation is an independent entity based in Switzerland which supervises the development of Cardano and its cryptocurrency ADA. It works together with IOHK and Emurgo to promote the use of Cardano and take it to the masses. The Foundation also helps to establish industry standards, facilitate partnerships, grow the community and help with Blockchain legislation.

Cardano Design Principles

From the beginning, Cardano had a different approach to all the solutions and endeavors they pursue. They want to take a scientific approach with focus on some principles that will guide them to their goals. Everything that they do, are based on this three design principles:

• Scalability
• Interoperability
• Sustainability

Scalability

Cardano tries to solve the scalability problem from the beginning. To achieve this, they assess the scalability problem not only as increasing the transactions per second that the network can process, but also as the increase in the network availability and the data scaling. Each of these aspects has a lot of thought behind it, white papers and solutions in place that we won’t go into in this article, but it’s worth mentioning.

#blockchain #cryptocurrency #crypto #cardano #blockchain-technology